The Securities & Exchange Board of India (Sebi) has directed foreign institutional investors who had lent shares of Educomp and Reliance Petroleum in the overseas markets for short-selling purposes to unwind these positions.
The regulator had on October 20, expressed its disapproval of lending shares in the overseas markets for short selling or synthetic short sales to the FIIs. Later the next day, on October 21, in a meeting they were clearly instructed not to take any further positions. But there were certain positions built up in the two companies and therefore when the data was available, the Sebi has directed the overseas investors to unwind these positions.
Data available for October 20 shows that around 15 company shares, totalling to 50 lakh, were lent in the overseas market. Prime among them were NTPC, DLF, Reliance Industries, Reliance Capital and Hero Honda, all of which have seen a considerable drop in values.
On October 23, a senior Sebi official had mentioned that the deadline to submit data was Thursday evening. Once this was analysed, there would be more clarity. And, since the FIIs were directed to not take any fresh positions, the regulator would be forced to ask them to unwind if they violate this directive, the official had mentioned.
Keeping this in mind, the Sebi has now directed the FIIs to unwind these positions in the overseas markets. On October 21, according to the Sebi data, there were positions in these two companies only. Around 69,414 shares of Educomp were lent in the overseas markets and around three lakh Reliance Petroleum shares.